recent Gallup Poll found that “nearly half (49%) of baby boomers still working say they don’t expect to retire until they are 66 or older.” Of those, one in 10 expects they will never retire. For many, the decision to delay retirement is not by choice.

In a follow up poll by Gallup, the majority of polled baby boomers agreed that they would retire earlier if there were viable retirement income options. Those who didn’t expected to retire at 73 or later, nearly seven years after their well-to-do counterparts.

Real Estate Investment Options: Financial Concerns Delay Retirement

Financial obligations and poor retirement investment planning, coupled with the economic collapse and subsequent recession, unseated many 50 something’s who might have otherwise been financial secure and able to retire at the traditional age of 65. In the face of job layoffs, financially-strapped children, and stock volatility, many have prolonged their working years to make ends meet.

To many seniors, a post-paycheck, post-workforce world feels fiscally improbable, which is why some baby boomers are rebelling against the typical investment model and seeking alternative retirement investment options.

Their alternative retirement investment choice? Real estate.

Investing in real estate for retirement seems counter-intuitive to many following the housing crisis of 2007. But for savvy investors looking to take back their financial stability, it’s a market rife with opportunity.

A smart property investment and a good property management team can bring an investor an annual cash on cash return of 8-10% on their investment property, with a projected 5 year internal rate of return (IRR) of 8-18% (depending on how the property is purchased).

Consider the following example of a turnkey property that has cash flow:

Retirement Income Option: Turnkey Cash Flow Property

Ideal investment property profile: a three bedroom, two and a half bathroom property in well researched cash flow rental market.

The investment property is a 1,428 sqft. family home built in 2008 in a quality neighborhood.

The finance buyer purchases the property for $133,750, pays 20% down, or a total of about $30K investment and takes a loan at a 4.875% interest rate (30 Year Fixed). The property is then rented for $1,150 per month.

Considering property management costs (10% of GOI), a monthly mortgage, and local taxes, an investor can expect to make around $3,400 per annum through rent. That’s 11.3% for a first year cash-on-cash return and 18.7% 5-year IRR.

That equates to roughly $283 per month in passive cash flow income for an investor for every $30K investment. That means that a $300K portion of a nest egg can be monetized to provide almost $3,000 a month in replacement income – without spending the principal.  That’s the magic of investment real estate for retirement. That’s monthly expendable income unaffected by stock or bond volatility. Which means it will be there month after month after month— rain or shine on Wall Street.

As far as retirement investment options go, residential real estate offers a prime opportunity for seniors looking for ways to replace their income and retire sooner.

Retirement shouldn’t be something to dread.

Investing in real estate for retirement helps investors take back their lives and their financial peace of mind. It’s the retirement income solution for seniors who need to build a nest egg in their remaining workforce years rather than drain from it.